Assume General Electric Company agreed in May 2016 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. The contract price of $750 million is to be paid as follows: $250 million at the time of signing; $250 million on December 31, 2016; and $250 million at completion in May 2017. General Electric incurred the following costs in constructing the generator: $240 million in 2016 and $360 million in 2017.

a. Compute the amount of General Electric's revenue, expense, and income for both 2016 and 2017, and for both years combined, under the cost-to-cost revenue recognition method.
Enter dollar amounts in millions.

2016: $300 million; 40%; $60 million

2017: $450 million; 60%; $90 million

Explanation:

Total costs:

= Costs incurred in 2016 + Costs incurred in 2017

= $240 + $360

= $600

In 2016:

Percent of total excepted costs:

= Costs incurred in 2016 ÷ Total costs

= $240 ÷ $600

= 0.4 or 40%

Revenue recognized:

= Percent of total excepted cost × Contract price

= 0.4 × $750 million

= $300 million

Income = Revenue recognized - Costs incurred in 2016

             = $300 million - $240 million

             = $60 million

In 2017:

Percent of total excepted costs:

= Costs incurred in 2017 ÷ Total costs

= $360 ÷ $600

= 0.6 or 60%

Revenue recognized:

= Percent of total excepted cost × Contract price

= 0.6 × $750 million

= $450 million

Income = Revenue recognized - Costs incurred in 2017

             = $450 million - $360 million

             = $90 million

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.